D.C. flex office space is expected to continue to surge, according to a new report.
CBRE Group, a real estate services and investment firm, released a report this fall that looks at how flex office space impacts the real estate industry and tech sectors of 40 U.S. markets. The firm sees D.C.’s flex office space offerings expanding as the tech industry continues to grow and Amazon plans to move in nearby.
CBRE reports that D.C.’s flex office space inventory reached approximately 2.7 million square feet as of the second quarter of 2019, having gained 917,000 square feet over the previous year. That’s a 52.5% increase in space, and makes D.C. the eighth largest flex space market in the U.S. by square footage, tied with Atlanta.
Flex office space takes up 2.1% of D.C.’s total office inventory. The report shared that flex office providers in D.C. are focusing their leasing efforts in trophy assets, which are properties in high demand by investors. D.C. has no shortage of these since the nation’s capital has many historic buildings situated in prime locations. In 2019, three leases were signed in trophy assets.
As far as location, 35% of D.C. flex office space is in the East End submarket, which is east of 15th street and includes the Chinatown, Penn Quarter, Judiciary Square, and Mount Vernon Square neighborhoods. You can find coworking spaces Convene, MakeOffices and Industrious in these areas.
We’ve seen new coworking spaces pop up this year — check out our comprehensive 2020 coworking guide to see them all — including some in Northern Virginia and Bethesda, Maryland.
CBRE also predicts that by 2030, flex office space could account for 22% of all office space nationally. The firm also found that tech hubs, such as D.C., San Francisco and Manhattan, are supplying more flexible space compared to other regions.
“Flexible office space continues to increase its footprint in the District and Greater Washington, D.C. region,” said CBRE’s senior director of research, Ian Anderson, in a statement. “As the region’s tech presence continues to grow, we expect this growth will continue and flex space will take up a larger share of the total office inventory.”
CBRE reports that as of the second quarter of this year, D.C. has 24 flex office space operators with 70 locations. Some of the fastest growing flex space operators in D.C. include Convene, Spaces, WeWork and MakeOffices. WeWork had the most with 15 locations and 1,219,000 square feet in the area. Convene, ranked fourth for growth, first broke into the D.C. market back in February with two locations. The global network of flexible meeting and coworking space also has surrounding meeting locations in Rosslyn and Tysons, Virginia.
In a separate report released in October, CBRE named D.C. as one of the cities leading in the tech industry’s impact on office rents for 2019: Out of the 30 leading tech markets in North America, the D.C. tech industry increased office market rent growth by 9.9% since 2017, ranking 11th (just above Philadelphia).